Will the lesson never be learned? Both the selling and the production sides of the seafood industry have to work together. They cannot act in isolation and then expect their part of the business to be a success.
We now have the ridiculous situation in Vietnam where pangasius exporters are turning away orders because they do not have the fish to sell. However, their buyers have been effectively forcing pangasius farmers out of business, so there is now a drastic shortage of raw material to process.
Importers in Vietnam’s two biggest pangasius markets, the European Union and United States, are queuing up to buy ahead of the Christmas and New Year festivities. And they are offering to buy at prices up to 20 percent higher than they were in the summer.
The exporters do not have the fish to sell because buyers sourcing on behalf of the processors have been refusing to pay the farmers a price at which the farmers can break even, let alone make a profit.
As recently as last month, buyers were refusing to collect fish at prices which had been agreed before the fish were produced, unless the farmers accepted less money. Faced with the extra costs of keeping the fish alive, the farmers duly harvested their ponds but then did not re-stock them.
It is not surprisingly that Vietnam’s pangasius farmers are leaving their ponds empty rather than continue selling at a loss, particularly as their own costs are going up. The prices of juveniles and feed are increasing significantly — by as much as 30 percent for feed — at the same time as interest rates on bank loans are rocketing.
Even if the buyers were now to change tack and offer the farmers more money, there is no way that sufficient fish will be available to meet Christmas orders. The species of pangasius is Pangasius hypophthalmus, or tra in Vietnamese, which is mostly exported is very fast growing. But it still takes six months to reach the harvest size of 1.5 kilogram average weight.
So, rather than pay the farmers a fair price earlier in the year, the processors have effectively shot themselves in the foot. Not only do they have no fish to sell, but the importers who were seeking to buy pangasius will be forced to look for alternative whitefish supplies, and who is to say that they will come back to pangasius if and when it is next available.
The scenario is rather reminiscent of days gone by when fishermen used to go out and catch as much as they could without a thought as to how much fish the merchants who had to sell it actually wanted. Now the situation is reversed and it is the sellers who are starved of fish, which should be available because it is farmed.
But the farmers have to be able to make a living producing it. Otherwise, as has happened now, they will simply stop production; there will be no fish to sell and everyone will lose out.
From the sellers’ point of view, surely it is better to have a steady supply of fish that can be sold at a steady price rather than to be always on the lookout for a quick buck?
Vietnam’s Ministry of Agriculture and Rural Development has just lowered its forecast on the country’s seafood export turnover in 2011 to USD 6 billion, down USD 100 million from the previous forecast, due in part to the raw material shortage.
Will the ministry knock a few heads together and inject some discipline into the pangasius industry? Going on past experience this is doubtful, but as one observer says: “Can you imagine what would have been the situation if they still had the farming going on like two years ago and were producing over 1.2 million tons of pangasius? They could serve the markets at ease with price attractive affordable fish.”
